Generation of transgenic animal models and production of useful genetically engineered mammalian cell lines is highly dependent on endogenous DNA recombination mechanisms (either homologous recombination or illegitimate recombination) for stable incorporation of exogenous DNA into the genome. We have developed an alternative and complementary recombination methodology based on the prokaryotic site-specific recombinase Cre from phage P1. Cre catalyzed conservative site specific DNA recombination at 34 bp loxP sites that can be engineered into the mouse genome. Recombination cassettes can thus be designed to either activate or deactivate any selected gene. Moreover, precise chromosomal deletions, translocations and inversions can be designed into the mouse genome and programmed to occur either somatically or in the germ line. To place these recombination substrates at defined chromosomal positions we are using homologous recombination in embryonic stem (ES) cells. Mechanistic analysis of Cre function should provide an increased ability to direct Cre-mediated events in cultured cells and transgenic mice. To understand and evaluate parameters that affect the efficiency of Cre-mediated recombination, variously modified Cre constructs are being examined for their ability to promote integrative and excisive recombination in eukaryotic cells: 1) Since Cre is of prokaryotic origin, it has been presumed that Cre's ability to enter the eukaryotic nucleus, and to thus catalyze efficient recombination at genomic sites, is due to its relatively small size (39 kDa) and consequent ability too passively diffuse through the nuclear pore. In cells expressing the cre gene, however, immunocytochemistry shows that Cre is almost exclusively nuclear. By fusing portions of the cre gene to reporter genes that themselves do not target the nucleus, such as lacZ, we have determined that various portions of Cre can confer nuclear localization ability to the fusion protein. Surprisingly, a Cre sequence that closely resembles the "canonical" bipartite nuclear localization signal plays no significant role in Cre's ability to target the nucleus. 2) Cryptic Cre recognition sites in the yeast genome have been identified. One such site, loxFAS1 has been characterized in detail. Although Cre does not catalyze recombination between loxFAS1 and the normal loxP site, expression of Cre in yeast results in enhanced mitotic crossover at the loxFAS1 locus, suggesting that independent site specifities could be exploited for genome manipulation.